News-Times June 6, 2012
Phone: 503-357-3181 www.fgnewstimes.com
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Power: Utility dollars go to economic development buys electricity from the Bonneville Power Administration. If the city’s power usage drops too low, Bliss said, BPA could hike the city’s rates. Johnson and Bouchard disagree. “Every incremental amount of power you purchase, you drive the average cost of the power you bought up, not down,” Bouchard said. Ultimately the city is rolling the dice, he said, with no guarantee that economic development will happen or keep utility rates low. “We’re gambling with Light & Power money,” he said. “Even though you may throw some money at economic development, it may not produce any tangible result.”
entirely with utility dollars. And critics say the move may break Oregon law. Last Thursday, the Forest Grove Budget Committee (which includes all members of the city council) unanimously approved the city’s 2012-2013 budget, including a provision to shift the entire $160,000 cost of the economic development office into the utility budget. City officials say they’re following other cities like McMinnville, which funds economic development efforts with that city’s utility dollars. But critics, including a former city councilor, a former director of the utility and a Plan fits city goals prominent lawyer, disagree. Forest Grove City Manager Dave Bouchard, who headed Forest Grove Light & Power Michael Sykes doesn’t think from 1992 to 2004, said the city the city’s taking any risks. He shouldn’t treat the utility fund said using utility dollars for economic development is fully like a cash cow. “Our philosophy was that within the law and fits with the [Light & Power] really doesn’t city’s goals. “People are concerned that have any money. It’s the customers’ money,” he said. “It’s there are a lot of empty busiour job to be managers of that nesses here and people are concerned we money for them. aren’t growing To bet on someenough jobs,” he thing as nebulous said. “The city has as economic det a ke n t h at t o ve l o p m e n t i n heart.” hopes that it will And when new somehow provide businesses come benefits to them, to town, Sykes is a real stretch.” said, the overhead O r e g o n l aw costs at the utility states that money are shared by f r o m a c i ty more people. owned utility can “When you’re be spent only on able to attract operations directbusinesses it’s ly related to the good for the utility, utility. But exactbecause all of a ly what kind of expenditures fit — Michael Sykes, sudden we are t h e l aw a n d Forest Grove city selling more powwhich ones don’t manager er and it helps defray your fixed isn’t entirely laid costs across the out in the statute. “The amount of money Light board,” Sykes said. Still, Johnson’s concerns & Power customers pay is for the services they get,” said were enough to prompt the city Bouchard argues. “That’s to ask for a legal opinion. Attorney Chad Jacobs, who what the law requires. You can dream up a million different works for the city’s contracted other things to do with it, none law firm, outlined a legal grounding for the policy. Jaof which would be legal. “ Victoria Johnson, a former cobs pointed to a 1981 decicity councilor who worked for sion by the Oregon Court of Portland General Electric, Appeals that allowed the Euquestioned the shift of the eco- gene Water and Electricity nomic development funding at Board to spend utility dollars a budget committee meeting on an energy conservation last month. “My concern with program. That ruling, Jacobs wrote, Light & Power is focused on protecting these funds from showed that the state had albeing raided for general fund ready grappled with the statactions,” she said. “The rates ute that Johnson is raising are meant to maintain the util- questions about and sided with the city’s position. ity.” Sykes said other cities use But budget committee member Bud Bliss, himself a former utility funds for activities like city councilor, said economic economic development, includdevelopment is directly tied to ing McMinnville. McMinnville City Manager utility rates. The city, he notes,
“People are concerned that there are a lot of empty businesses here and people are concerned we aren’t growing enough jobs. The city has taken that to heart.”
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Metropolitan Pediatrics, L.L.C. Same phone number 503-531-3434
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Kent Taylor said that six years ago the city began sending utility funds to a private non-profit economic development group. “They’ve been extremely successful,” Taylor said. “It’s been renewed every year and people are very positive about it.”
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‘Jury’s still out’ But Portland attorney John DiLorenzo said Forest Grove officials are wading into uncharted waters by spending utility dollars directly on city hall operations. DiLorenzo said cases like this aren’t particularly common, though cities are often tempted to try and crack into city-owned utility funds. “Whenever you have a fund that appears to be unlimited in that it is controlled by ratepayers who have no choice but to pay the increased fees, there is always the temptation to use it for purposes that have nothing to do with what it was intended to support,” he said. But DiLorenzo, who represents a group suing the city of Portland over its use of utility dollars, admits that the statutes governing utility money are hard to decipher. “There is as strong an argument that spending the money on economic development violates the statutes as there is that it doesn’t,” he said. “The jury is out.” DiLorenzo, however, questions the city’s use of the 1981 Eugene case to defend its position. While courts in that case upheld the use of utility funds for an energy conservation plan, he isn’t convinced they’d see Forest Grove’s economic development program in the same light.
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Since 2005, when Jeff King was hired as Forest Grove’s first economic development director, he’s worked hard to fill up empty shops in the city’s downtown. But the way the city pays for him is now under fire.
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NEWS-TIMES FILE PHOTO: CHASE ALLGOOD
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Economic electricity King’s position ($100,000 in salary and benefits) has always been funded in some way by Light & Power, according to Paul Downey, the city’s finance director. Two years ago, he said, the allocation was made an even 50/50. This year, Downey said extra revenue from last year’s Light & Power budget will cover the cost of the economic development position, meaning ratepayers won’t see an increase to their utility fees tied to King’s duties. Forest Grove Mayor Pete Truax said asking ratepayers to fund the city’s economic development effort is completely appropriate — and has been from the start. “What we are doing is right and legitimate for the citizens of Forest Grove,” he said. “I didn’t see the controversy then, and I don’t see the controversy now.”
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